Colcom ANALYSTS PRESENTATION 2010.ppt

7/28/2019 Colcom ANALYSTS PRESENTATION 2010.ppt

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Presentation Outline

1. Overview

2. Summarized Divisional Performance

3. Group Financials

4. Future Prospects


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Overview

In H1, the Group continued to build on thegains made in Q4 of the previous yearfollowing liberalisation of the economy in

February 2009.In H2, despite macro-economic activityslowing, along with various factors affecting

operating margins, the Group continued togrow its business and profitability.


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Overview (cont)

In line with the Groups focus on its corebusiness of pigs and processed porkproducts, the Groups breeding cattle herdwas disposed of in H1.Using its own and borrowed funds atfavourable interest rates and repaymentterms, the Group

a) Took advantage of lower stockfeed prices in H1b) Has embarked on upgrading some of its equipment

and processing technologies in the Coventry Roadfactory


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SUMMARIZED DIVISIONALPERFOMANCE


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Triple C Pigs

Weekly average supply of 1 100 pigs fromGrasmere and Villa Franca under Triple Ccontrol.There was a 16% improvement in averageslaughter weights during the year.Utilisation levels at the units is currently100%.


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Triple C Pigs (cont)

The protein ban resulted in delays in ourgenetics renewal during that period.

This has had a negative effect on born alivenumbers which will be resolved by Q2.


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Slaughter & Processing

Total pig intake (which includes pigs fromthird party producers) increased by 1% overprior year.

15% increase in weight terms.With the exception of the protein import banperiod, we can source adequate additionalraw material regionally if and when required.

Colcom also provides third party growerswith a service slaughter facility.


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Plant utilisation increased from an overall 30% inprior year to:

Slaughter 63%

Deboning 64%Processing 68%

This in particular led to greater throughput into the

processing factory, which in turn meant improvedprofitability through greater absorption of fixedoverheads.

Slaughter and Processing (cont)


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During the year an investment of $500 000was made in IT Manufacturing Systems toimprove on stock and yield control. Benefitsof this will be felt in the new financial year.

Slaughter and Processing (cont)


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Sales & Distribution

Year on year volumes increased by 72% (albeitfrom a low base).Price adjustments over the year were veryminimal, driven by wage and utility increases.Colcom continued its aggressive focus on marketshare, with an associated ongoing emphasis on

maintenance of quality and hygiene standards.


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H2 09 Volumes 2,577t H2 09 ASP $3,26/kg

H1 10 Volumes 3,787t -47% increase H1 10 ASP $3,84/kg H2 10 Volumes 3,406t 10% decrease H2 10 ASP $4,08/kg

Sales & Distribution (cont)


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Sales & Distribution (cont)

These stats show the traditional seasonaltrading patterns with peaks happening duringHeroes and Christmas holidays

It also shows migration to higher value productsalbeit at lower volumes


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At AMP Division, volumes increased by 222% over prioryear.Contributed $317k to Groups pre -tax profitThere was a slight increase in the proportion of processed products from 29% to 32%Focus this year will be increase value addition products

Other Businesses

Beef (JV 50,5%)


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The Meat Shop and Drink Slik was opened inSam Levys Village, Borrowdale.

Other Businesses (cont)

Beef (JV 50,5%) (cont)

drink slik


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Pies

Division renamed Colcom Convenience FoodsRecorded overall volume growth of 158%Traditional Colcom pies volumes increased by 116%whilst ready-to-bake pies volumes were 532%Traditional pies reached 100% of its capacity in Q2and new equipment was installed in Q3.Ready-to-bake pie line introduced in Q3 which hasalso increased capacity


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Pies (cont)

Traditional Pies H2 09 Volumes 669t H1 10 Volumes 861t 29% increase H2 10 Volumes 891t 3% increaseReady-to-bake Pies H2 09 Volumes 233,000 units

H1 10 Volumes 1,094,000 units 369% increase H2 10 Volumes 1,982,000 units 81% increase


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Colcom Canning (JV 50,1%)

Profitability at this Division remained marginalAlthough volumes achieved doubled comparedto prior year these were mainly in baked beanswith low margins.Volumes of other cans subdued due tocompetition from imports and cost of importedplate.Also, the ability of wholesalers to stock cannedproducts in meaningful quantities is impeded bytheir own working capital constraints.


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Danmeats

Factory remains mothballedFreezer facility used as storage for the Group


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Properties New SBU

Formed to ensure profitable return from theGroup propertiesManaged by a third partyPretax yield on properties of 9%


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Freddy Hirsch (Associate)

Performed exceptionally wellNatural casings volumes increased by 266%

Ingredients volumes increased by 182%Contributed $300 000 pretax profit.


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GROUP FINANCIALS


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Prior Year Adjustment restated deferred taxon fixed assets and biological assets and theimpact was adjusted for in NDR broughtforward net adjustment of $2.5m betweenNDR and deferred tax provisionQualification of comparative Statement of Comprehensive Income, Statement of Changes in Equity and Statement of CashFlows - due to prior year qualification.


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Financial Highlights

Turnover: $42 million (up 112%)Pretax Return onturnover 14%PBT $5,862,913

EPS US Cents 2,79Dividend: Interim 0,45 cents

Final 0,80 cents

Total 1,25 centsPretax Return on restatedopening s/holders equity: 35%


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Group Income StatementCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 JUNE 2010

30 June 2010 30 June 2009Audited AuditedUSD USD

CONTINUING OPERATIONSTurnover 41,882,636 15,627,117

Operating profit before depreciation and amortisation 6,263,310 (832,504)Depreciation and amortisation (938,811) (681,750)Fair value adjustments 222,234 768,263Monetary adjustment - 2,416,572

Operating profit before interest and tax 5,546,733 1,670,581Net interest 16,052 (1,910)

Equity accounted earnings 300,128 46,007 Profit before tax 5,862,913 1,714,678Taxation (1,133,251) 799,276

Profit for the year from continuing operations 4,729,662 2,513,954Loss after tax for the year from discontinued operations - (1,705,436)

Profit for the year 4,729,662 808,518Basic earnings per share (cents) 2.79 0.59


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Sectoral Contribution

Turnover %Contrib PBT %Contrib Margin

Pork business 32,502,417 78% 4,878,070 83% 15%

Beef - AMP 4,344,264 10% 317,869 5% 7%

Grain 5,035,955 12% 200,223 3% 4%

Properties - 0% 466,751 9% 100%

Total 41,882,636 100% 5,862,913 100% 14%

Pre-tax


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Turnover increase of 112% was mainly due tovolume growth price adjustments were minimalOverheads staff and other overheads consumed33% of turnoverFair Value Gains of $222,234 arose fromimprovements in slaughter weights from 70kg to81kgNet interest received of $16,052 arose frominvestment of excess cash on the local marketNet margin of 14% was achieved

Comments Income Statement


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Effective tax rate achieved was 19.3% - benefitfrom fixed standard values on livestock and taxrate reduction from 30,9% to 25,75% (ondeferred tax)Dividend: Interim paid 0,45c

Final 0,80cTotal 1,25c

Slight deviation from 3 times policy in order to

return to shareholders part of their previousinvestment in breeding herd.

Comments Income Statement (cont)


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Abridged Cash Flow

AUDITED2010 AUDITED2009

Net cash flow from operating activities 3,063,436 88,267

Net cash used in investing activities (630,979) (65,037)

Net cash from financing activities 1,037,643 569,523

Net increase in cash and cash equivalents 3,470,100 592,753

cash and cash equivalents at beginning of period 1,292,452 699,699

Cash and cash equivalents at end of period 4,762,552 1,292,452


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Balance Sheet / Cashflow Comments

Capex for the year amounted to $1,7m, of which$600 000 was maintenance capex and $1,1m beingexpansion.Expansion projects include new pie equipment,Borrowdale Meat Shop and Manufacturing ITsystem among others.These projects will begin to contribute to

profitability in the new financial year.Biological assets consist of the pig herd at Triple Cand a small herd of cattle. These form the core of the Groups businesses.


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Balance Sheet/Cashflow Comments (cont)

Debtors book of $4,1m is net of doubtful debtsprovision $460 000.Borrowings of $2,3m comprise of $1,5m long term loanreceived just before year end. Loan tenor 4 years andinterest rate of 11%. Loan earmarked for improvementsto the Coventry Road factory.Balance was short term loan at 6% which has sincebeen paid off.

Net cash inflow from operating activities amounted to$3m this represents 65% of PAT indicating that theprofits made are bankable.


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Forecast Actual Achieved

Turnover 39 million 42 million

Pretax Return 12% 14%

Cash/Credit ratio 60/40 38/62

Capacity utilization 75 80% Average of 70%

New Products Additional 12 Additional 9

Summary of Forecast vs Actual


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Although macro economic activity has slowed,

Management is confident of the Groups abilityto maintain its growth momentum.This will be achieved by:

Continuing focus on operational efficiencies

The use of new technology to streamline productionand cut costs particularly with the Groups newlyinstalled IT systems

Use of the Groups dominance in processed foodmanufacturing and distribution to increase the rangeof quality and margin of products and services


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Forecasting a minimum of 15% increase inpre-tax profit in 2011Two months ending August 2010 indicatethat we are on track to achieve thisCapex for next year is budgeted at $2.2mmainly to re-equip the ageing equipment

in the factorySeveral strategic initiatives in the pipeline

Future Prospects (cont)


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Thank you for joining us today

Documents

Colcom ANALYSTS PRESENTATION 2010.ppt